in Re: Omega Systems

COURT OF APPEALS THIRTEENTH DISTRICT OF TEXAS CORPUS CHRISTI - EDINBURG ___________________________________________________________________ 13-04-641-CV ALPHA MASONRY, INC., Appellant, v. PETERSON CONSTRUCTION, INC. AND CERVIS PLUMBING, INC., Appellees. ___________________________________________________________________ On appeal from the 370th District Court of Hidalgo County, Texas. __________________________________________________________________ 13-04-642-CV IN RE: ALPHA MASONRY, INC. ___________________________________________________________________ On Petition for Writ of Mandamus. __________________________________________________________________ 13-04-643-CV IN RE: OMEGA SYSTEMS ___________________________________________________________________ On Petition for Writ of Mandamus. __________________________________________________________________ MEMORANDUM OPINION Before Chief Justice Valdez and Justices Hinojosa and Rodriguez Memorandum Opinion by Justice Rodriguez On December 3, 2004, in cause number 13-04-641-CV, appellant Alpha Masonry, Inc., appealed the trial court's order denying its motion to compel arbitration or in the alternative to stay litigation. On December 7, 2004, relator Alpha Masonry filed a petition for writ of mandamus in cause number 13-04-642-CV, requesting this Court to direct respondent, the Honorable Noe Gonzalez, presiding judge of the 370th District Court of Hidalgo County, Texas, to vacate his order denying Alpha Masonry's motion to compel arbitration and to dismiss litigation or in the alternative, motion to stay litigation and to compel arbitration of disputes between Alpha Masonry and real parties in interest Peterson Construction, Inc., and Cervis Plumbing, Inc., and to dismiss and/or stay the trial court proceedings as between Peterson Construction, Cervis Plumbing and Alpha Masonry pending the resolution by arbitration. Alpha Masonry also filed an emergency motion for temporary relief asking this Court to stay all proceedings in the trial court until its petition for writ of mandamus and/or interlocutory appeal have been decided. On December 7, 2004, in cause number 13-03-643-CV, relator Omega Systems filed its petition for writ of mandamus asking this Court to require respondent to vacate his order denying Omega Systems's motion to compel arbitration of disputes between Peterson Construction and Omega Systems and to stay the trial court proceedings as between Peterson Construction and Omega Systems pending resolution by arbitration. Omega Systems also filed a motion for temporary relief requesting this Court to issue a temporary stay order pending our resolution of its petition for writ of mandamus. On December 8, 2004, we granted a stay of all proceedings until the petitions for writ of mandamus and/or the interlocutory appeal had been decided. On December 9, 2004, the trial court, after reviewing the pleadings and our December 8, 2004, order, severed all claims by or against Alpha Masonry and Omega Systems from the remaining claims and docketed the severed action, styled Peterson Construction, Inc., Cervis Plumbing, Inc., and Wingate Inns International v. Alpha Masonry, Inc. and Omega Systems, as cause number C-1895-02-G(2). Peterson Construction responded to the petitions for writ of mandamus and requested that this Court (1) deny the petitions because it has been determined that there is no enforceable arbitration provision in the general contract upon which the subcontract is based, see Peterson Construction, Inc., v. Sungate Development, L.L.C., Nos. 13-03-525-CV, 13-03-653-CV, & 13-03-665-CV, 2003 Tex. App. LEXIS 9340, at *4 (Tex. App.–Corpus Christi, October 30, 2003, combined orig. proceeding and appeal, pets. for mandamus and for review denied); or (2) hold that the general contract between Peterson Construction and Sungate Development, L.L.C., owner of the project at issue and plaintiff in the underlying case, requires that they arbitrate their disputes and issue the writ to enforce arbitration and stay the entire underlying case pending arbitration. Both Alpha Masonry and Omega Systems replied arguing that nothing in their subcontract with Peterson Construction directly or indirectly ties the arbitrability of their disputes to the enforceability of the arbitration agreement between Sungate Development and Peterson Construction. They assert that their right to arbitrate arises from the subcontracts and is not dependent on the validity or invalidity of defenses to arbitration of disputes between Sungate Development and Peterson Construction. Peterson Construction's sur-reply re-urges its position that the existence of an enforceable arbitration provision in the general conditions is a condition precedent to any agreement to arbitrate with subcontractors. On December 28, 2004, appellant Alpha Masonry filed its brief in the interlocutory appeal, arguing that the claims against Alpha Masonry should be ordered to arbitration. Alpha Masonry asserts: (1) the trial court abused its discretion in denying Alpha Masonry's Motion to compel arbitration; (2) arbitration of disputes was provided for in the general contract; and (3) the existence of an enforceable arbitration agreement as between Sungate Development and Peterson Construction is not a condition precedent for arbitration of disputes under the subcontracts. Appellee Peterson Construction responded on January 10, 2005 again urging that Alpha Masonry is entitled to arbitration only if the arbitration clause in the general conditions is enforceable against Sungate Development, as well as Peterson Construction. Given the nature of these petitions for writ of mandamus and the related appeal, this Court has concluded that these cases should be considered together. See In re Valero Energy Corp., 968 S.W.2d 916, 916-17 (Tex. 1998) (orig. proceeding) ("[T]he better course of action for a court of appeals confronted with an interlocutory appeal and a mandamus proceeding seeking to compel arbitration would be to consolidate the two proceedings and render a decision disposing of both simultaneously . . . ."). Interlocutory appeal is appropriate to review an order denying arbitration under the Texas Arbitration Act (TAA). See Tex. Civ. Prac. & Rem. Code Ann. §§ 171.021, 171.098(a)(1) (Vernon Supp. 2004-2005). Mandamus is appropriate to review an order denying arbitration when the Federal Arbitration Act (FAA) applies. In re Valero, 968 S.W.2d at 916 (citing Jack B. Anglin Co. v. Tipps, 842 S.W.2d 255, 272 (Tex. 1992) (orig. proceeding); In re MONY Secs. Corp. v. Durham, 83 S.W.3d 279, 282 (Tex. App.–Corpus Christi 2002, combined appeal and orig. proceeding). Consistent with our determination in Peterson Construction, 2003 Tex. App. LEXIS 9340, at *3, we conclude that the arbitration provisions at issue evidence a "transaction involving commerce" and are subject to the FAA. See In re MONY, 83 S.W.3d at 282-83. Thus, mandamus is the appropriate vehicle for relief. See id. Accordingly, we DISMISS the interlocutory appeal in cause number 13-04-641-CV for want of jurisdiction. See id. at 283. "Mandamus will issue only to correct a clear abuse of discretion when there is no adequate remedy by appeal." In re Redondo, 47 S.W.3d 655, 658 (Tex. App.–Corpus Christi 2001, orig. proceeding). "A trial court abuses its discretion when it does not follow guiding rules and principles and reaches an arbitrary and unreasonable decision." Id. A party seeking to compel arbitration must (1) establish the existence of an arbitration agreement and (2) show that the claims asserted fall within the scope of that agreement. In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex. 1999) (orig. proceeding); In re C & H News Co., 133 S.W.3d 642, 645 (Tex. App.–Corpus Christi 2003, orig. proceeding). Alpha Masonry and Omega Systems entered into subcontracts with Peterson Construction. Both subcontracts expressly required arbitration, but only "[i]f arbitration is provided for in the General Contract." The referenced general contract is the agreement entered into by Peterson Construction and Sungate Development. However, this Court, by denying Peterson Construction's previously filed petition for writ of mandamus challenging the trial court's denial of its motion to arbitrate claims made by Sungate Development, declined to order arbitration under the general contract. See Peterson Construction, 2003 Tex. App. LEXIS 9340, at *4. Likewise, we now decline to order arbitration between Alpha Masonry, Omega Systems, and Peterson Construction. See, e.g., Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84-85 (2002) (question of whether particular arbitration agreement binds parties to arbitrate is reserved for court); In re Neutral Posture, Inc., 135 S.W.3d 725, 728 (Tex. App.–Houston [1st Dist.] 2003, orig. proceeding) (same). The trial court did not abuse its discretion in denying the motions to compel arbitration filed by Alpha Masonry and Omega Systems. See In re Oakwood Mobile Homes, 987 S.W.2d at 573; see also Jack B. Anglin, 842 S.W.2d at 271; Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding). Therefore, having reviewed the petitions for writ of mandamus, the responses and replies, and other documents on file, this Court is of the opinion that the petitions for writ of mandamus should be denied. Relator Alpha Masonry, Inc.'s petition for writ of mandamus in cause number 13-04-642-CV and relator Omega Systems, Inc.'s petition for writ of mandamus in cause number 13-04-643-CV are hereby DENIED. We also lift the stay of proceedings in respondent's court that was imposed by this Court's order of December 8, 2004. Furthermore, all motions not previously ruled on in this matter are, hereby, denied as moot. NELDA V. RODRIGUEZ Justice Memorandum Opinion delivered and filed this 18th day of January, 2005.